Consultant: Boulder utility can succeed

Independent reviewer says city's modeling effort more rigorous than most

A Boulder municipal utility has a high likelihood of success and can meet the charter requirements of providing greener power than Xcel Energy at comparable rates, a consultant told the City Council on Tuesday.

PowerServices Inc. was hired through the City Manager's Office -- not the city's Energy Future office, which did Boulder's own municipalization analysis -- in an attempt to create more independence for the firm's review.

Boulder's charter requires an independent, third-party evaluator to look at the city's analysis before Boulder can form an energy utility.

Gregory Booth, president of PowerServices Inc., said Boulder's modeling effort was more complex and more rigorous than what many companies and public power utilities go through before undertaking acquisitions.

His team's analysis was "not a simple audit," he said, but used public documents and the experience of other companies -- private and public -- that PowerServices has represented to look at the assumptions behind Boulder's models.

Booth told the City Council that a Boulder utility should be able to meet all the charter requirements for forming an energy utility.

The charter conditions are: that rates do not exceed those charged by Xcel Energy at the time Boulder acquires the system; that the rates produce enough revenue to pay operating expenses and debt payments, along with a reserve worth 25 percent of debt payments; that the system's reliability be comparable to Xcel's; and that the city have a plan to reduce greenhouse gas emissions and increase renewable energy.

Advertisement

In addition to meeting those requirements, Booth said the city has a strong likelihood of being able to offer rate parity with Xcel over a 20-year period, which is the standard the City Council has said it will use.

Booth said the most significant factor in rates is going to be the price at which Boulder can purchase power on the open market. However, he said the city would have more flexibility to take advantage of new technology and changing energy prices than a large investor-owned utility.

"Can you turn a speedboat around more quickly than an aircraft carrier? Of course, you can," he said. "There is no question you have more opportunities to act quickly on new opportunities, not only for your community but for your customers."

Councilman Ken Wilson, who has expressed strong skepticism toward a municipal utility, pressed Booth on how well the city's model accounted for uncertainties. He asked Booth about other acquisition cases, some of which Booth was involved in, in which a public utility's estimated acquisition costs were much lower than a court ended up deciding.

Booth said entities that want to acquire another entity's assets have to take a public position in support of a lower price.

"First of all, you don't show all your cards," he said. "The cities have their studies and know the real costs, and then they have their public position they're going to go into court with and try to get the best deal they can."

Booth said Boulder's model was conservative enough to accommodate a lot of risk. For example, wind prices are continuing to come down, and in some cases are lower already than the assumptions Boulder made in its models.

"What you have in your model is not only achievable, but we're seeing real-world examples where prices are coming in lower," he said.

MacIntyre feels Colorado is capable of making run at bowl gameCU BUFFS FALL CAMPWhen: 29 practices beginning Wednesday morning 8:30-11 a.m. Wednesday, Thursday, Friday and Saturday practices are open to the media and public next week. Full Story

It didn't take long for Denver music observers to notice Plume Varia. Husband and wife Shon and Cherie Cobbs formed the band only two years ago, but after about a year they started finding themselves on best-of lists and playing the scene's top venues. Full Story